International Trade and Development: Exploring the Impact of Fair Trade Organizations in the Global Economy and the Law

Article excerpt

I. INTRODUCTION

What difference does fifty dollars make in the life of the average American? A new pair of jeans? Dinner and a movie for two? A monthly telephone bill? For most Americans, the gain or loss of fifty dollars is a relatively insignificant event. But what if it made the difference between prosperity or mere survival, life or death? For millions of people around the world, access to even the slightest amount of capital is all they need to rise out of utter destitution into the world of self-sufficiency and economic stability.

Such was the case with Maximina Garcia Lapa, a Peruvian woman who was forced to flee her native village by Shining Path (Sendero Luminoso) guerillas in the 1980s.1 Maximina and her family fled from rural Peru into the city of Ayacucho, where they encountered a scarcity of jobs, inadequate and overcrowded housing, and poor sanitary conditions.2 Since finding work in these circumstances was difficult, if not impossible, Maximina turned to the resource she already possessed-her knowledge of plants-to support herself and her family.3 With a fifty dollar loan from the Foundation for International Community Assistance (FINCH), Maximina was able to purchase the materials and equipment necessary to begin a small business producing and selling natural dyes.4 After years of hard work, her business has grown large enough to employ six family members. It has also provided Maximina with the funds to build her own house with water and electricity and to purchase two hectares of farmland that supply the business with plant material5 Maximina's case illustrates the enormous beneficial impact that even the tiniest amounts of capital, or microloans, can make in the life of a developing world entrepreneur.

Empowering people like Maximina to achieve economic self-sufficiency is at the heart of the "fair trade" or "alternative trade" movement, which promotes socially responsible trade and development with producers in developing countries.6 The fair trade movement's goal is to change the way in which international trade is conducted between developed world consumers and developing world producers by making the welfare of the producer of primary importance.7

Studies indicate that workers in the informal sector8 are most in need of development assistance;9 accordingly, the movement focuses on producers of handicrafts10 and agricultural products from this sector. Despite the focus on small producers, however, fair trade proponents are also active in efforts to lobby large corporations and governments to adopt policies addressing the ethical treatment of workers, human rights, and other social and legal concerns.11 Additionally, because the fair trade movement is concerned with international trade as it affects artisanal, communal production, and the informal sector, the term "fair trade" as used by the movement is distinguishable from trade protectionism, where one country seeks to trade on the same "fair" terms as another.12

This "fair trade" strategy calls for eliminating practices that exclude the producer from most of the financial benefit of the trade and promoting economic self-sufficiency at the producer level.13 In addition to their lobbying and advocacy efforts, fair trade organizations (FTOs) usually work directly with the producer to develop, finance, distribute, market, and sell products.14 As "[t]rade represents 80 per cent of income to the developing world," if successful, the movement will have a significant impact on the condition of producers.15 Fair trade publications are full of stories of people like Maximina who have overcome hardship through trade. For them, fair trade presents an opportunity to rebuild their lives. Thus, inherent in the fair trade movement is a concern for both the economic welfare and human rights of producers.

Although many consumers in developed nations are unaware of the existence of these organizations, there are now hundreds of fair trade organizations throughout the world, and the market for "fairly-traded" products is increasing yearly. …